Plunge

The fiscal cliff has come and gone and in its place we got another short-term stepping stone. While Democrats can more or less celebrate a win, the country really cannot. In lieu of a deal, we got a stop-gap. It's not a bad stop-gap, but even a good stop-gap is well short of a good deal which is what the country need.

The specifics of the deal have already been detailed, so rather than focusing on what the deal gave us, I'll focus on what it didn't. And what we didn't get is, sadly, a lot of what we needed.

Higher taxes on the wealthy are a great start, although admittedly, they don't raise a ton of revenue. The deal does a good job of raising some revenue, but a poor job of raising an adequate amount, and it makes permanent tax rates that are probably too low when times are good. Of course, permanent tax rates are only permanent until a new law changes them, but the economic reality is that taxes should rise or fall with economy, so making them "permanent" is more of a political stunt than a responsible policy move.

Furthermore, the deal does nothing to address either short-term austerity or long-term deficits. The deal does nothing to address the automatic spending cuts that went into effect along with tax hikes on January 1st, it only delays them. For all of their blustering about the deficit and spending cuts, Republicans proposed none, and Democrats reciprocated, crafting a bill that didn't even give us tough decisions on tax increases, instead choosing to raise the income level for those who would be taxed higher. Far from being a bill that should have taken this long to negotiate, what we got was a cop out from both parties. Democrats folded on taxes and Republicans didn't even pretend to have ideas for spending cuts.

What we need is more revenue and substantial reforms on entitlement programs. It is imperative that we avoid the sequester which would cause immediate damage to the economy. Anything that appeases the Tea Party is almost by definition bad for the country, and what America needs right now is more, rather than less spending. Of course in the long run we must find ways to lower the bills, and that means addressing entitlement and military spending. There have been numerous proposals for how we can go about achieving these goals: raising the medicare or the retirement age; means testing privatization measures; reducing payments; trimming military spending by making the military more nimble. Obamacare is good attempt to help control future medical spending. But these are long-term things, in the short term, we need spending. Instead we got modest tax hikes on a small handful of people.

It's not that the deal is bad, it's that the deal isn't good. Not bad deals keep delaying the inevitable. Not bad deals necessitate future not bad deals while doing nothing to repair our economy nor put us on a fiscally responsible path. If this was our attempt to avoid going over the cliff I think we plunged. We wasted another opportunity to actually do something real about our problems. Here's to next time.